Generally speaking, countries have at their disposal two main tools with which to influence the state of the (nation's) economy: monetary and federal policy. As we studied in chapter 14, countries can opt for either an easy or tight monetary policy to grow or shrink the nation's monetary reserves. . .to expand or reduce the amount of money flowing through the economy. These policies are decided on by, in the case of the US, the Fed. Alternatively, as we'll explore in later chapters, Congress may make use fiscal policy to aid a particular sector of the economy (businesses or consumers) by implementing or reducing regulations, increasing or decreasing taxes, offering stimulus checks or bailouts, etc.
There are, however, several cases in our current global economy in which nations, willingly or not, have forfeited their ability to employ monetary policy. Cases vary by country and context. At times, such decisions have beneffitted the nations in questions. Other times, the consequences have been more grave.
Your task is to explore a country which has given up, to some extent, its control over monetary policy. . .within the past decade or so. You should research the roots of the decision behind your chosen country's decision to replace the national currency as well as the ways the country has been affected since the currency was changed. Organize your findings into a 1-2 page persuasive article in which you argue in favor or against your chosen country's decision to do away with its currency. Bolster your case by including data about changes in employment, foreign (business investment), GDP, per capita income, etc. Quote economists and/or critics who have spoken/written about your particular topic.
Some suggestions for case studies. . .
*"Dollarization" in El Salvador, East Timor, or Ecuador
*"Euro" in European Union countries (pick a specific country)
*spread of the "Austrailian Dollar" in Oceania
*spread of the "New Zealand Dollar" in Oceania
*spread of the "South African Dollar" in south African countries
Deadline: Thursday, February 24, 2011.
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